The Competition Commission of India (CCI) has held the conduct of Intel Corporation (Opposite Party) to be in contravention of Sections 4(2)(a)(i), 4(2)(b)(i), and 4(2(c) of the Competition Act, 2002. The holding came after finding that OP has abused its dominant position by imposing unfair and discriminatory India Specific Warranty Policy in respect of boxed microprocessors imported into India from its authorised distributors outside India in contravention of Sections 4(2)(a)(i), 4(2)(b)(i) and 4(2)(c) of the 2002 Act causing Appreciable Adverse Effect on Competition (AAEC) in the Indian market, preventing the Indian consumer from availing after sale warranty service on authentic Intel boxed microprocessors in India.
After considering turnover of boxed microprocessors and finding the same in line with the Turnover Regulations, 2024, the Commission imposed penalty @ 8% of the average total relevant turnover, as the basis for determination of penalty to be imposed upon the OP under Section 27(b) of the Act. The Commission also imposed a penalty of INR 27.38 crore upon OP for violating Section 4 of the Act.
The Bench comprising Ravneet Kaur (Chairperson), Anil Agrawal (Member), Sweta Kakkad (Member), and Deepak Anurag (Member) observed that a consumer who needs a Boxed Micro-Processors (‘BMPs’) for assembling his desktop will not buy a notebook/laptop in place of microprocessor. The Commission also notes that in the instant matter, the warranty has been changed for BMPs sold in India otherwise than through authorised distributors and not with respect to microprocessors installed by OEMs in their products, which are already covered by OEM warranty.
The Bench noted the finding of investigation that boxed microprocessors are used in desktops only and that both Intel and its competitor AMD do not sell boxed micro-processors for laptops in India. Authorised distributors of Intel like Ingram Micro India Pvt Ltd., also submitted that it does not have any engagement or arrangement for BMPs for laptops with the OP. Accordingly, the relevant product market is delineated as ‘Boxed Microprocessors for Desktop PCs in India’.
With regard to relevant geographic market, the Commission noted that OP does not manufacture its products in India and all its microprocessors are imported into India either separately or fitted into Information and Communications Technology (‘ICT’) devices/ equipment, from OP’s authorised distributors or factories located outside India. Such imports are subject to trade policy, rules and regulations governing import, import duties, conversion rates etc. which vary from country to country.
The Commission observes that the allegations pertain to change in warranty policy pertaining to India and subjected Indian markets and consumers to India Specific Warranty Policy. The competition conditions are also homogenous across the territory of India. Accordingly, the relevant geographic market is ‘India’ and the relevant market is ‘market for Boxed Microprocessors for Desktop PCs in India’.
The Commission notes that Intel does not manufacture its products in India and all its products are imported in India either by authorised distributors or parallel importers. The technology and quality of Intel products hence, remains the same, irrespective of the country where the product is being sold. The Commission further notes that prior to 2016, Intel used to provide a world-wide manufacturer’s warranty on its products in India.
The Commission further observes from the investigation report that Intel offers three-year limited warranty on its BMPs irrespective of the country of purchase. However, it has a separate ‘warranty service’ policy for India, Australia, China and rest of the world. The Commission notes that apart from the Indian ‘warranty service’ policy, none of the policies prevailing in other jurisdictions restrict the applicability of warranty service for BMPs purchased from other countries.
Briefly, the Informant stated itself to be a Delhi based Information Technology (‘IT’) trading company, engaged in the business of importing, wholesaling, distributing and supplying a wide range of IT products including CPUs, storage solutions, security cameras, RAMs, laptops and other computer consumables as well as accessories including printing supplies, and hard disks etc. OP is a leading multinational corporation and technology company incorporated in California, USA in 1968 and re-incorporated in Delaware, USA in 1989, engaged in the activities of designing and manufacturing of a wide range of IT components, peripherals, computer systems, etc. as well as manufacturing and distribution of electronic devices relating to communications and computing such as microprocessors, chipsets, mother-board, integrated circuit, etc.
The Informant stated itself to be a parallel importer of Intel micro-processors in India, which is legally permissible. As per the Informant, parallel imports are beneficial for the consumers as import of goods from a country with lower prices force sellers in the country of destination to reduce prices. The Informant stated that it imports Intel Micro-processors from OP’s authorised distributors in other countries and sells the same to consumers in India at competitive prices. As per the Informant, prior to 2016, Intel used to provide manufacturer’s warranty within India on its Boxed Micro-Processors (‘BMPs’) that may have been purchased from any country in the world.
However, w.e.f. 25.04.2016, Intel amended its warranty policy for India. As per this new policy, Intel would entertain warranty requests for Intel BMPs in India only when the same are purchased from an authorised Indian distributor of Intel (‘India Specific Warranty Policy’). As a result of this India Specific Warranty Policy, OP does not acknowledge warranty requests on its BMPs that are purchased from its authorised distributors in the rest of the world and instead redirects them to country of purchase to avail the warranty.
As per the Informant, such separate warranty terms of Intel for India vis-à-vis the rest of the world, is arbitrary and unfair towards the Indian market and consumers. As per the Informant, because of the changed warranty policy, Indian customers are being forced to purchase Intel’s BMPs only from the authorised distributors of OP in India in order to avail the after-sales warranty within the country. Further, such policy change gave Intel’s Indian authorised distributors a position of power to sell its BMPs at higher prices. The Informant claimed that though it may be possible to claim warranty on Intel’s Boxed Micro-Processors purchased from outside the country by sending them abroad, but it may not be feasible to do so on account of cross-border restrictions as well as cost and time implications. Hence, as per the Informant, such change in its warranty policy by Intel is abusive in nature and anti-competitive under the provisions of the Act.
As per the Informant, the exclusive agreement between Intel and its authorised Indian distributors which gives them exclusive selling rights in India is violative of Section 3(4)(c) of the Act. The imposition of condition to purchase from only certain sellers/ distributors for claiming warranty in India and blanket ban on after-sales warranties if purchased from other sources is resulting in deprivation of consumer choice which is also violative of the provisions of Section 3(4)(d) of the Act. Further, Intel’s restriction on independent resellers and/or parallel importers, by not providing warranty on Intel’s Boxed Micro-Processors purchased from sellers other than Intel’s authorised distributors in India, is violative of Section 3(4)(e) of the Act.
Appearances:
Advocates Khyati Dhupar, Yashwardhan Singh, and Swarnendu Chatterejee, for the Informant
Advocates Samar Bansal, Karan Chandhiok, Tarushi Guliani, and Aileen Aditi Sundardas, for the Opposite Party
